Correlation Between Oil Natural and Samhi Hotels

Can any of the company-specific risk be diversified away by investing in both Oil Natural and Samhi Hotels at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Oil Natural and Samhi Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Oil Natural Gas and Samhi Hotels Limited, you can compare the effects of market volatilities on Oil Natural and Samhi Hotels and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Oil Natural with a short position of Samhi Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and Samhi Hotels.

Diversification Opportunities for Oil Natural and Samhi Hotels

0.26

Correlation Coefficient

Oil Natural  Samhi Hotels

Modest diversification

The 3 months correlation between Oil and Samhi is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Samhi Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samhi Hotels Limited and Oil Natural is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Oil Natural Gas are associated (or correlated) with Samhi Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samhi Hotels Limited has no effect on the direction of Oil Natural i.e., Oil Natural and Samhi Hotels go up and down completely randomly.

Pair Corralation between Oil Natural and Samhi Hotels

Assuming the 90 days trading horizon Oil Natural Gas is expected to generate 0.96 times more return on investment than Samhi Hotels. However, Oil Natural Gas is 1.04 times less risky than Samhi Hotels. It trades about 0.07 of its potential returns per unit of risk. Samhi Hotels Limited is currently generating about 0.05 per unit of risk. If you would invest  16,984  in Oil Natural Gas on October 5, 2024 and sell it today you would earn a total of  8,905  from holding Oil Natural Gas or generate 52.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Oil Natural Gas  vs.  Samhi Hotels Limited

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Samhi Hotels Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samhi Hotels Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Samhi Hotels may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Oil Natural and Samhi Hotels

The main advantage of trading using opposite Oil Natural and Samhi Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural position performs unexpectedly, Samhi Hotels can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Samhi Hotels will offset losses from the drop in Samhi Hotels' long position.

The idea behind Oil Natural Gas and Samhi Hotels Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.